Fiscal Winter Blankets Holiday Retail Sales
Despite the warm and fuzzy feeling Black Friday sales gave to retailers and investors, the cold harsh reality of a fiscal winter is blanketing the market.
An early reading on holiday retail sales in the United States indicate the weakest shopping season in four years. According to MasterCard Advisors SpendingPulse, a report that tracks spending on popular holiday items, sales in the two months before Christmas increased only 0.7 percent, compared to a 2.0 percent gain last year. Several analysts were expecting holiday sales to increase around 3 to 4 percent.
Even though sales still posted positive growth, it was the worst reading since 2008, when sales dropped between 2 percent and 4 percent as the financial crisis kicked into high gear. The International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index also showed a sales increase of only 0.7 percent in the week leading up to Christmas.
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The preliminary results are causing concerns as consumer spending accounts for about 70 percent of the overall economy. “There’s always high hopes that the consumer steps up and saves the day. At the moment it seems like maybe that’s not happening,” explains Richard Sichel, chief investment officer at Philadelphia Trust Co, according to WSJ. “In the background, you still have the good ol’ fiscal cliff, but there is still some hope that with the clock ticking something will be resolved.”
Online sales grew, but at a slower rate…